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Bankruptcy and your tax filing?
Anonymous2 views3 answers
I do NOT owe any taxes to the IRS I do not expect a refund either. When my bankruptcy is discharged, how do I go about filing my tax return next year? Is there anything special I need to do? Does the the trustee also file a tax return for the bankruptcy estate or is that only when you owe taxes?
Much appreciated.
There isn't anything "special" that you need be concerned with in preparing and filing your tax return next year. Just remember, sometimes creditors issue 1099s for forgiveness of debt, but this is not taxable as income when it is discharged in bankruptcy.
Curtis Lamar Harrington JrTax LawyerLong Beach, CA ·
Study IRS publication 908 carefully. You didn't state your chapter, but chapter 7 & 11 have their own separate estates. Although resumption tax return periods are not stated in the PUB, it would seem that you may have two potential worries/actions:
1. Resumption of your personal tax account after termination/discharge of the chapter 11. (chapter 7 seems to continue your personal account on post petition earnings so there is less discontinuity -- however remember that 7 does have a sharp break for post petition versus pre-petition, but seems to treat post petition and post discharge the same.
2. You need to make sure that filings on reduction of basis in assets are filed as soon as you know the discharge amounts.
As a practical note there is not much pain to a reduction of basis now when the likely sale of the asset may be many years and much inflation later on.
Inform your tax preparer all about the discharge amount.